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What Is Corporate Law?

A corporation is a legal entity created under state law. The law treats a corporation as an entity separate from its owners, or shareholders, who own stock in the company. Corporations can be small or startup businesses incorporated for tax purposes or large companies formed by mergers between other businesses.

What makes corporations unique from other business entities is the manner of business formation. Corporations must follow state regulations and file documents of incorporation so the state recognizes them as a corporation. Businesses need the legal services of a good business lawyer to ensure they comply with state requirements.

For more information on incorporating a business, visit FindLaw's Corporations overview page.

What Is Corporate Law?

Corporate law encompasses all the legal issues that corporations can face. Corporations are subject to many regulations they must follow to enjoy the tax and other benefits of corporations. Most states require corporations to conduct annual shareholder meetings. State law requires meetings of the board of directors and corporate officers. Most corporations have legal counsel at all meetings to ensure that the corporation complies with state and federal requirements.

Besides these corporate law issues, corporations face all the legal issues of other businesses. These can include:

  • Employment law issues
  • Contract review and disputes
  • Product liability
  • Intellectual property
  • Real estate transfers or leases

Small businesses may have a business attorney on retainer to handle the company's legal issues. Larger corporations may need a team of lawyers or a business law firm to handle their business needs.

Terms To Know

  • Corporation: A legal entity formed to conduct business
  • Close corporation: A corporation with few owners and private stock
  • Public corporation: A corporation with many stockholders and publicly traded stocks
  • S Corporation: A corporation with a limited number of shareholders. S-corps have tax benefits without stock options like other corporations
  • Piercing the Corporate Veil: A judicial act of imposing personal liability on the owners, shareholders, or officers of a corporation
  • Chief Executive Officer (CEO): The executive with the chief decision-making authority in a corporation. The board of directors appoints or hires the CEO.
  • Board of Directors (BOD): A group of individuals elected by the shareholders to manage the corporation's business dealings

Other Considerations When Hiring a Corporate Lawyer

Corporations can incorporate in states other than their home state. Delaware is a favorite state, offering tax benefits and low incorporation costs. However, corporations must still register in all states where they do business. If your business plan includes outside incorporation, speak with a business law attorney to discuss the advantages and disadvantages.

Various state and federal statutes govern issuing stock, calling board meetings, appointing or firing officers, and communicating with shareholders. Failure to follow these regulations could expose the corporation and its owners and officers to liability and fines. Most corporations hire a lawyer experienced in this area of law to ensure that the corporation is always in compliance and avoid legal fees.

If you or your business is facing a corporate law issue, contact a business lawyer immediately for legal help.

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You Don't Have To Solve This on Your Own – Get a Lawyer's Help

Small-business owners should get legal advice when the time comes to incorporate. Before making that decision, talk with an attorney to review your company's legal needs. Visit our attorney directory to find a business lawyer near you who can help.

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